Contributed By: Edwin L. Crammer CPA
Back in the late nineties and early 2000s, there was a rush to build new housing for the “Over 55” families in Palm Beach County. These developments located from the areas of Delray Beach in the South through Lake Worth in the North, for the most part were centered around Country Clubs that were either existing or were built as part of the overall development.
Living in a Country club development, was thought of as an incentive to having potential buyers purchase homes in these developments over those developments that did not have a country club as part of the overall area. For the most part, as an incentive to purchase a home in these developments, buyers were given the option of not having to join the Country club, if they did not wish to join.
After most of the homes were sold and occupied in these developments, the managers of these Country clubs, realized that not enough homeowners had chosen to join the club. As a result, these clubs were losing money. First, one country club, and then most of the other country clubs in the areas, went to the Property Owners Association, who was charged with the overall management of these developments, to seek mandatory membership in these clubs. In order to do this, they needed a majority vote of the affected homeowners.
In order to sweeten the pot, the Country clubs, offered low initial membership dues and other incentives to get a positive vote for mandatory membership. In addition, it was agreed that if mandatory membership was voted in, those homeowners, who had originally opted out, were exempt from membership. However, when they sold their homes the succeeding homeowners were obligated to join.
Fast forward to 2013, with a recession that began five years ago, and the cost of membership in these clubs having doubled, and in some cases, tripled, those developments that had adopted mandatory membership were having trouble selling their homes. In fact, it has taken two and three times longer to sell the homes in these developments than a comparable home in a development that does not have the same rules. In addition, the homeowners who have put their home on the market in recent years, have found that they have to list and sell their homes at a much lower price than a comparable home in a non-mandatory Country club development if they wished to sell their home at all.
One development has decided that they will no longer “take it on the chin”. A group of homeowners in the Country club development, “Aberdeen” located in Boynton Beach, have formed a committee to force the Property Owners Association to have a new vote by the homeowners to overturn the mandatory membership rule. They were able to accomplish this by invoking the 30 year rule, which requires Property Owners Associations to be renewed after 30 years at the request of the homeowners.
A series of meetings have been held by the group that is fighting for this change. A number of e-mails have also been sent to those homeowners asking them to vote for the amendment to overthrow, the mandatory membership rule. The Country club is fighting this by sending out a direct mail response to the homeowners, refuting the allegations of the Homeowners Association group.
A vote is scheduled for sometime in October, for the homeowners to vote on this matter. If the rule is overturned, Other Homeowners Associations in the area, which are affected by the same restrictions, will look to amend their by-laws to change that rule in their developments. It should be an interesting October. The question is if the mandatory membership rule is overturned, what happens to those homeowners who had to purchase their homes and join the club as a consequence.
Contributed By: Edwin L. Crammer
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Contributed By: Edwin L. Crammer CPA